jakiro
Author: Zhang Feng
During the Northern and Southern Dynasties (420-589 AD) period in my country’s history, it showed great changes and great integration characteristics.The unified order collapsed, multiple regimes stood in unison, war and peace alternated, population, capital and culture flowed violently between the north and the south, full of huge uncertainty and opportunities.
Surprisingly similar to the Southern and Northern Dynasties,Today, the modern financial market, which is turbulent in the global macro landscape, the reshaping of traditional asset logic, and the rise of “emerging assets” such as cryptocurrencies, is surprisingly similar in the underlying logic.We are in the “Northern and Northern Dynasties” in the financial field: the traditional financial system (Northern and Northern Dynasties) coexist, collide, collide and integrate. Investors, like politicians or businessmen at that time, must find ways to survive and develop in such a split and interconnected pattern.
The logic of human game, resource flow and power change behind the historical development of the Southern and Northern Dynasties seems to be “repeated” in today’s capital market in another form.Understanding this history is not only a review of the past, but also a profound insight into current market behavior.
Generally speaking, the “Northern Dynasty” in currency-stock linkage is similar to traditional stock markets (such as US stocks).The system is mature, with strong fundamentals and support from the central bank (government). Just like the Northern Wei Dynasty in the Northern Dynasties, the system is relatively perfect and the foundation is deep.The US stock market has been developing for a century, with improved supervision and institutional leadership, and is closely linked to economic fundamentals and monetary policy, showing strong trend and stability.Like the Northern Dynasty regime, it has strong resource mobilization ability and institutional resilience, and often shows strong risk resistance in turmoil.
“Southern Dynasty” is similar to the cryptocurrency market.Flexibility, innovation and volatility are huge, with a strong “overseas apartment” and “immigration” color. Just like the Song, Qi, Liang and Chen in the Southern Dynasties, the regime changes frequently, but the cultural and economic vitality is vigorous.As an emerging field, the crypto market has fast technology iteration, diverse participants, and obvious emotions-driven, and often shows high volatility and high returns in the short term.It is like the Southern Dynasty regime. Although the regime changes frequently, it always maintains cultural innovation and economic vitality, attracting a large number of “disabled people” (emerging capital and talents) to influx.
Successful operators cannot only focus on the individual U.S. stocks or cryptocurrency markets, but must stand at the global macro level and understand the common core driving force that dominates these two markets.Market volatility is no longer an isolated event, but a result of the interweaving of multiple factors such as global liquidity, risk preferences, and policy expectations.Investors need to have a vision to transcend traditional finance and crypto fields in order to capture real trend opportunities.
The core key is to grasp the general trend of “north and south”, rather than the winners and losses of one time and one place.During the Southern and Northern Dynasties, successful politicians (such as Emperor Xiaowen of the Northern Wei Dynasty and Emperor Wen of the Sui Dynasty Yang Jian) or merchants would never be limited to the Southern or Northern Dynasties.They are based on the overall situation, understand the general trend of “long separation and longevity” and look for opportunities in the interaction between the north and the south (war, trade, marriage).Those forces that only stick to one side and ignore the overall pattern are often eliminated in the torrent of history.For example, although Liu Yu of the Southern Dynasties made contributions to the Northern Expedition, his successors failed to continue to grasp the general trend of interaction between the north and the south, which eventually led to a decline in territory; while Emperor Xiaowen of the Northern Wei Dynasty strengthened his own strength through active sinicization, laying the foundation for later unification.
1. Information first: establish an information network that connects the “north and south”
During the Southern and Northern Dynasties, whoever had better intelligence networks would be able to be prescient.For example, the Northern Wei Dynasty could know the trends of Jiankang in Luoyang, and the Southern Dynasties could also understand the political changes of the Northern Dynasties through business travel.Information asymmetry often becomes the key to victory or defeat.Those forces that can establish cross-regional information networks can gain the upper hand in war, trade and diplomacy.
Merchants obtain information on the scarcity of materials and policy changes between the north and the south through caravans traveling between the “Silk Road” (Henan Road and Grassland Road).These caravans are not only a channel for material circulation, but also a bridge for information transmission.They can perceive subtle changes in the North-South relationship in advance, so as to adjust strategies in trade, avoid risks, and capture opportunities.
In the modern capital market,We must also pay attention to the Federal Reserve policy, CPI, GDP, geopolitics representing the “Northern Dynasty”, as well as the blockchain data, regulatory dynamics, technological upgrades, and community sentiment representing the “Southern Dynasty”.This means that investors need to pay attention to macroeconomic indicators, central bank policy statements, geopolitical events, as well as on-chain transaction volume, position distribution, regulatory policy changes, project progress, etc. in the crypto field.
The key point is to identify the common main line between the two.For example, when the “Northern Dynasty” (Federal) initiated interest rate cuts and QE (quantitative easing), just like Emperor Xiaowen of the Northern Wei Dynasty promoted the Chineseization and introduced the institutional culture of the Southern Dynasty, funds would flow into the “Northern Dynasty” (stock market) and the “Southern Dynasty” (coin market), forming a linkage of synchronous rises.On the contrary, when there is an aggressive interest rate hike (sustainment policy), it may fall simultaneously.This linkage stems from the tidal effect of global liquidity: when liquidity is abundant, risky assets generally benefit; when liquidity tightens, risky assets generally under pressure.
2. Insight into the “clutch” opportunity: identify the nodes that switch linkage mode
The relationship between the Southern and Northern Dynasties was not static, sometimes the Northern Expedition and Southern Expedition (negative correlation), and sometimes the Peaceful Trade (positive correlation).Successful operators can keenly capture the signal of mode switching.For example, when the Six Towns Uprising occurred within the Northern Wei Dynasty, the Southern Dynasties might have had a good opportunity to expedition the Northern Expedition; and when the north and the south are connected well, trade and trade exchanges became the mainstream, and both sides benefited the economy together.
Positive correlation (peaceful trading period) isThe north and south are connected to the west and commerce is prosperous, and tea from the Southern Dynasties and horses from the Northern Dynasties benefit together.Corresponding to the opening/closing mode of market risk, when global liquidity is abundant or exhausted, currency stocks rise and fall together.Under this model, investors should tend to allocate two types of assets at the same time to capture the benefits brought by systematic rises.
Negative correlation (war standoff period) isWhen one party experiences civil unrest (such as the uprising of the Six Towns of the Northern Wei Dynasty) or external threats (such as the Rouran invasion), the other party’s assets may become a safe haven.Corresponding to the market risk aversion/risk-taking model, when a crisis occurs in the traditional financial system (such as a banking crisis), funds will flow out of the “Northern Dynasty” (stock market) and pour into the “Southern Dynasty” (cryptocurrency) to seek risk aversion. At this time, currency stocks are negatively correlated.Under this model, investors need to flexibly adjust their positions and dynamically allocate between the two types of assets.
In the modern capital market,When you hear the “Northern DPRK” (Federal/Treasury) discussing “inflation” and “financial stability”, you must judge whether this is a common threat to both sides or a specific blow to one side.For example, if high inflation causes the Fed to raise aggressive interest rates, it may put pressure on the stock market and the currency market at the same time; but if the crisis originates from traditional financial institutions, funds may flow to the crypto market to hedge risks.
When the “Southern Dynasty” (cryptocurrency) experiences huge technological innovations (such as Ethereum merger) or application breaks the circle (such as NFT and DeFi Summer), it may attract the inflow of funds from the “Northern Dynasty” and form an independent market trend, and the linkage will weaken at this time.Investors need to be keenly aware of these structural changes and avoid over-reliance on historical linkage models.
3. Make good use of “economic counties and counties” and “refugee commanders”: embrace new assets and new forces
During the Southern and Northern Dynasties, the Southern Dynasties established “economic counties and counties” to resettle refugees from the north, and these forces later became the main force of the military (Northern Mansion Army).Similarly, new asset classes and forces are constantly emerging in the market.Forces that can identify and integrate these new forces early often stand out from the competition.
Liu Yu’s Northern Mansion soldiers were originally developed from refugee armed forces and eventually became a key force in changing dynasties.Although these “refugee coaches” have humble origins, they have strong combat effectiveness and adaptability, and become the key variables that determine victory or defeat in troubled times.
Modern capital marketIn the currency-stock linkage, you cannot just focus on Bitcoin and the S&P 500 index.We should pay attention to “economic counties and counties” – that is, emerging crypto assets (such as Layer2 tokens, DeFi protocols, AI+ Crypto projects) and technology growth stocks in the US stock market.These assets often represent future technological directions and market demands, and have higher growth potential.
These “disabled coaches” (new forces) are often more sensitive to liquidity and have greater fluctuations, which can provide higher excess returns in the linked market.The key to success is to discover and configure these future stars early.Investors need to maintain curiosity and research investment in emerging tracks, avoid over-reliance on traditional assets, and thus remain ahead of the market evolution.
4. “Equalizing the Field Order” and Risk Management: Ensure that you can survive under any pattern
The Northern Wei Dynasty implemented the equal land order, allowing the people to have land to cultivate and the country to collect taxes, laying the foundation for unification.This is essentially a robust resource allocation and risk management system.No matter how the regime changes, families with land and food can always continue, which reflects the core value of risk management in turbulent times.
No matter how the northern and southern dynasties change, families with land and food can always continue.By dispersing resources (land, food, commerce, etc.), they ensure that they can make ends meet and even accumulate wealth in any political environment.
In the modern capital market, asset allocation (similar to Juntian)Don’t All-in single market.Decentralized allocations must be made between the “Northern Dynasty” (traditional stocks and bonds) and the “Southern Dynasty” (cryptocurrency).This ensures that in any market environment (risks on/off, war/peace), your “empire” will not collapse instantly.For example, 60%-70% of assets can be allocated to traditional stocks and bonds, 10%-20% can be allocated to cryptocurrency, and the rest can be allocated to cash or other alternative assets.
Position management (similar to the Mansion System)Like the Northern Dynasties, they worked in farming during peacetime and went on wartime.Most of the funds should be in a “farming” (stable allocation) state, and only part of the mobile funds should be used to “go to the expedition” (capture linkage opportunities).This structure ensures the stability and flexibility of the combination, neither breaking down by excessive speculation nor missing opportunities due to overconservatism.
Stop loss and stop profit (similar to building a city and defending yourself)Set a clear exit mechanism.Just like building a fortress on the border, when the market trend is contrary to your judgment based on the “north-south trend”, you must decisively stop the loss and retain your strength.For example, when the linkage mode is reversed (such as from a positive correlation to a negative correlation) and continues to deteriorate, the relevant positions should be reduced to avoid the increase in losses.
5. The vision of “Sinicization Reform”: Understanding the long-term impact of institutional changes
Although the complete sinicization of Emperor Xiaowen of the Northern Wei Dynasty caused short-term pain, it laid the cultural and institutional foundation for the unification of later generations.This corresponds to fundamental institutional changes in the market.Struggles that can foresee and adapt to institutional changes often win in long-term competition.
Emperor Xiaowen moved the capital to Luoyang and made comprehensive reforms.Although it was opposed by conservative forces in the early stages of the reform, in the long run, it promoted national integration and cultural unity, laying the foundation for the prosperous times of the Sui and Tang Dynasties.The forces that ignore this trend will eventually be eliminated by history.
Modern capital marketThe background of currency-stock linkage is undergoing profound “Chinese reform” – that is, the institutionalization and compliance of cryptocurrencies.For example, the approval of the Bitcoin spot ETF is equivalent to giving the “Southern Dynasty” a legal identity in the “Northern Dynasty”.This trend is irreversible and will gradually change the asset attributes, participant structure and price formation mechanism of the crypto market.
The key to success lies in predicting and laying out such long-term and fundamental institutional changes in advance.This will make the linkage between the two markets become increasingly “closed” from the past “loose alliance” and even eventually merge into one.Ignoring this trend will lead to being eliminated by history like the conservatives of the Northern Dynasties.Investors should pay attention to indicators such as the evolution of regulatory policies, the depth of institutional participation, and the innovation of financial products, and adjust their investment strategies in a timely manner.
6. The future is a person who understands the interaction between the north and the south and grasps the general trend
Looking at the history of the Southern and Northern Dynasties, the key to success is those who grasp the general trend and those who understand the laws of interaction between the North and South.
A global perspective.Abandon the tribal thinking of either this or that and establish a macro-analytical framework that connects the traditional financial and crypto worlds.Investors need to understand the operating logic, drivers and interactive mechanisms of the two markets at the same time, so as to avoid missing opportunities or misjudging risks due to narrow vision.
Insight.Accurately identify whether it is currently in “peaceful trade” or “war standoff” mode, and keenly capture the signal of mode switching.This requires investors to pay attention not only to the current market status, but also to potential policy changes, technological breakthroughs and structural switching.
flexibility.Just like using “economic counties and counties”, actively embrace emerging assets and tracks and maintain the vitality of the portfolio.The market is always evolving, and only by constantly learning and adapting can we continue to capture excess returns.
Survival.Through asset allocation and risk management (Yuantian Ling), ensure that you can survive any “turbulent times” in the market.Risk control is not conservative, but the cornerstone of long-term victory.
Big trend.Deeply understand the irreversible “Chinese reform” trend of “institutionalization” of cryptocurrencies, and make long-term layout based on this.The future of the market belongs to investors who can cross cycles and foresee trends.
The most successful operators will be those who can understand the advantages and disadvantages of “South” and “North” like Emperor Wen of Sui, Yang Jian, who finally completed the unification in the late Southern and Northern Dynasties, integrate them, and establish a new “imperial” (investment system) that transcends the North and South and embraces the old and new.They can not only make profits from division, but also dominate the future in integration.This history tells us that true wisdom is not about choosing “south” or “north”, but about understanding their interactions and building their own and sustainable victory model based on this.
